Medicare Compliance & Reimbursement

Suppliers should get proactive about budget changes, experts advise

Suppliers shouldn't let the looming Deficit Reduction Act changes catch them by surprise--now's the time to prepare to survive and thrive under the new policies.

The uncertainty DRA changes bring puts suppliers in a tough spot. And details about some DRA changes--such as oxygen capped rental--are particularly scarce. "It is very difficult to build a business plan in this information vacuum," says Joe Lewarski, vice chair of the American Association for Homecare's HME/Respiratory Therapy Advisory Council. Providers should study their businesses closely and look for ways to become more efficient and lower the cost of providing service, Lewarski advises.

"If your spouse came home and said 'I lost my job,' you wouldn't stop eating or paying your bills," says Tom Williams of strategy and market development firm Strategic Dynamics Inc. in Scottsdale, AZ. "What you would do is ... get rid of discretionary cost [and] be more prudent until you got that income back." Suppliers should look to do the same thing with their businesses, he suggests.

Put more energy into examining the new climate and figuring out how to do business in it, Williams advises suppliers. To combat uncertainty, suppliers can:

1) Look at risk exposure. For example, suppliers should determine how many of their patients have historically used oxygen equipment beyond 36 months. This will define the magnitude of the potential revenue hit in the new oxygen capped rental climate, says Williams. "The best predictor of the future is the immediate past," he says, so this gives suppliers a barometer to measure the impact to their individual business.

 2) Prepare internally. Suppliers should take the time to look at how they run their businesses, Williams says.

"Knowing the details of your operational costs and controlling them, controlling the cost of goods and making smart business purchases, stratifying products by payment and profit margins and making sound business decisions about the business lines they enter and exit" will help suppliers to avoid business errors in times of tighter margins, says Lewarski.

3) Strategize. Suppliers should look for ways to grow their businesses in other non-Medicare-related areas, suggests Williams.

4) Join an industry organization. Becoming a member of AAHomecare or a state home medical equipment association, for example, helps empower suppliers by bringing then together as a group to gather facts, think through changes and increase legislative sway, experts say.